Top 5 Programmatic Advertising Industry Predictions For 2018

Top 5 Programmatic Advertising Industry Predictions For 2018

2017 was quite the year for header bidding with big moves from Google and the overall maturing of an industry. Server-to-server has arrived as a compliment to header bidding rather than an alternative which many assumed. Google introduced exchange bidding in beta, announced the Google Chrome Ad Block tool in cooperation with the Coalition for Better Ads and publishers & demand partners have become savvier by adapting to the new programmatic ad auctions of today.

Related read: https://www.monetizemore.com/blog/programmatic-advertising-explained/

2017 was another year of hyper-innovation that transitioned into a stage of maturation. Header bidding has established its foothold in the industry, regulations have been put in place to benefit users and the longevity of publishers, and I expect this transition to amplify in 2018 with the below predictions:

#1: Intrusive ad companies will die-off

Google has announced that the Google Chrome Ad Block tool that will make ad blocking much more accessible for users will be available in February 2018. The ad blocking tool will block all ads from sites that are not compatible with the Coalition for Better Ads (CBA). That means if a site is running ads that are blacklisted by the CBA, the Google Chrome Ad Block tool will block all ads on that particular site. This will also be the case on the Apple Safari browser.

Since Google Chrome and Apple Safari both have a significant market share, getting ad blocked by these two browsers would be detrimental. Therefore, publishers have already started eliminating intrusive ads like auto-sound outstream ads, interstitials, pop-unders, and pop-up ads. Once Google Chrome and Apple Safari release their Ad Block tools and users start using them, blacklisted publishers will begin scrambling once they see their ad revenues plummet.

While some publishers might lose out from this change, it’ll be the ad networks that focus on these intrusive ads that will be hurt the most. There are many ad networks that only run non-standard ads that are all blacklisted by the CBA. Either they will pivot proactively, or their businesses will shrink until they become ad tech industry casualties.

#2: Many DSPs will cut-out the SSPs

A few Demand-Side Platforms (DSPs) have already built Prebid adapters and have been able to realize the fruits of cutting out middle-man Supply-Side Platforms (SSPs). With server-to-server becoming more popular and accessible, this will become even more attractive for DSPs. Expect the entrance of DSPs into integrating directly with publishers via header bidding and server-to-server to accelerate.

With the evolution of the ad tech industry, the market is becoming more efficient with middle-man SSPs getting cut out. DSPs and publishers will realize greater profit margins with a player taken out of the ad delivery chain. DSPs will be able to outbid SSPs for direct publisher inventory and will be able to save on bids and see higher volume from greater win rates. Publishers will see greater RPMs from seeing higher bids from DSPs, and a greater piece of the original ad spend pie.

#3: Video ad Header Bidding will finally gain traction

Currently, instream video ad header bidding is available. However, it is only supported by a handful of demand partners. As a result, the publishers that have implemented video ad header bidding have seen limited results. This implementation can only be as fruitful as the demand partners that a publisher can run on it.

We will see greater support from demand partners for video ad header bidding in 2018. Publishers have been pushing for it, the video ad ecosystem is becoming mature enough for it, and the benefits have been proven on the display side. Expect the remaining major video demand partners to adopt video ad header bidding followed by the smaller demand partners.

The publishers will follow once there is greater support from video demand partners and the video ad header bidding success stories start flooding in from publishers. Many sophisticated publishers will look for an in-house Prebid video ad header bidding setup. For the rest of the publishers that don’t have sufficient developer and ad op resources, they will utilize third-party tools and services to get video ad header bidding set up in an optimal fashion.

#4: The coalition for Better Ads will expand their blacklist

The initial blueprint to the CBA’s blacklist will adjust over time. The current blacklist is based on an educated guess based on the collaboration of many major ad tech companies in the industry. However, certain issues and realities will show themselves once Google Chrome and Apple Safari release their ad block tools that will enforce this blacklist.

We expect that CBA will expand their blacklist instead of constricting it. Currently, outstream video ads with auto-sound are blacklisted. However, all outstream video ads have been proven to be horrible for user experience. We expect the CBA to get tougher on outstream video ads overtime. This could be via a maximum file size for outstream video ads, or it could be a full-out blacklist of any outstream video ads. Either way, we expect this type of change to happen late in 2018.

#5: Server-to-Server and Exchange Bidding will coexist with Header Bidding

This isn’t the first time I mentioned this prediction. I have said these three auction dynamics will coexist via DFP since the Summer of 2016 and this has already started. Some of the most sophisticated publishers in the world are already running header bidding, server-to-server and exchange bidding simultaneously. They have reported strong increases and have even conducted A/B tests with or without each auction dynamic and have concluded that all three running simultaneously yields the highest RPMs.

While running all three is more optimal and is possible today, the implementation is quite convoluted. Only the most sophisticated adopters have been able to crack it, and many others have failed. Exchange bidding is still in a closed beta, so only a small number of publishers have access to it. Server-to-server has been mostly adopted via Prebid, and it is only available in the latest versions of Prebid. Many publishers are still having issues with just header bidding alone.

Suffice to say; it will take some time before running all three will be widely adopted. Most publishers do not have the expertise or resources to facilitate this type of implementation. Therefore, it will take time for the industry to catch-up and offer complementary tools and services to enable simpler implementation of all three auction dynamics to maximize publisher RPMs.

Conclusion

The past three years have seen rapid innovation within the ad tech industry which succeeded a bit of a lull in innovation for some years. Innovation is still strong in the ad tech industry, but we’re now seeing evidence of a new maturation phase. Ad tech companies have started approaching the war against ad blockers from a different light. Maybe the high adoption of ad blockers is somewhat the fault of the ad tech industry? Perhaps monetization was too much of a focus while user experience took a back seat for too long.

The creation of the CBA is a responsible move from the ad tech industry and will help improve user acceptance of web monetization via online ads. As the industry matures, contractions are imminent. Companies that have been used to the intrusive ad gravy train will see harder times in 2018. Publishers will clean up their ad maps and improve their user experience. The overall web experience will improve because of this move, and this will prolong the longevity of many ad tech and publisher companies as a result.

While the ad revenues might dip in the short-term, publishers will be able to compensate for these dips via more optimal ad tech implementations and optimizations like server-to-server, video header bidding, and Google Exchange Bidding. Opportunities to increase RPMs and ad revenues have never been greater for publishers, but a proportional demand for resources would be necessary. As the industry matures, complementary tools and services will be available to make these types of implementations more accessible.

2018 will be known as the year that the ad tech industry began to grow up.

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Kean Graham

CEO and Founder at MonetizeMore

Kean is the resident expert in Ad Optimization covering areas like AdSense Optimization, DFP Management, and third-party ad network partnerships. Kean believes in the supremacy of direct publisher deals and holistic optimization as keys to effective and consistent ad revenue increases.

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